Political economy and Economic Development: Mobility, Inequality, Stigma and Prosperity.

By Beatriz Rodriguez-Satizabal and Dr. Caterina Gennaioli

What is the political economy of monitoring pollution in China? Should we be using relative or absolute measures of inequality? What are the economic implications of stigma? Have skills and human capital a long term effect on local economic conditions? Is there intergenerational mobility in Africa? Is the millennium missing out in rising prosperity? These were some of the questions raised by CGR and guest researchers during the annual Workshop on Political Economy and Economic Development and during the Annual Globalisation Seminar hosted by the Centre for Globalisation Research on the 9th of November, 2018.

The one day event started with a workshop on political economy and economic development where Dr. Sebastian Axbard (SEF-QMUL), Dr. Sanghamitra Bandyopadhyay (SBM-QMUL), Dr. Sanchary Roy (King’s College), Dr. Pierre-Louis Vézina (King’s College) and Prof. Elias Papaioannou (London Business School) presented their recent research. Professor Paul Collier, this year’s speaker of the Annual Globalisation Seminar, closed the event discussing marginalisation, globalisation and divergence. Collier provided his perspective on the successes and failures of development, poverty and inequality policies around the world, highlighting that the “millennium has missed out in rising prosperity”. Based on his lifetime research, he discussed how demographic and technological changes have created a deep class divide between the high and the low educated. The world is witnessing fragile governments with not much legitimacy and a low capacity to perform basic functions, such as raise taxes or provide security. Globalisation has only partially fulfilled its promise to increase living standards in the most fragile contexts of the developing world. Prof. Collier recognized the importance of the international efforts deployed to fuel the economic development of weak states, but highlighted the poor results reached so far and criticised the myopic approach followed by international organisations such as the World Bank and the IMF. Collier made his argument reminding the audience that “the cause is completely independent of the solution” and “there is a difference between the step by step process of scaffolding and the building itself which represents the final result”. He concluded that international organisms should stop imposing “successful” macroeconomic policies and applying economic and political models from developed countries to fundamentally different contexts.

Dr. Sebastian Axbard (SEF-QMUL) presented a paper on the monitoring of pollution in China, a research based on official pollution records and local pollution targets between 2014 and 2017. Dr. Axbard argued that the monitoring imposed by the Chinese government, proves to be an effective tool to reduce pollution. However his research unveils interesting political economy aspects of this policy intervention showing that when reductions in pollution are determinant for the future career of politicians, monitoring is subject to manipulation. Dr. Sanghamitra Bandyopadhyay (SBM-QMUL) presented a careful analysis of inequality measures. Following the recent studies on the long-term trends in inequality, she introduced a distinction between relative and absolute measures of inequality. Modelling 18 inequality measures for 34 countries, Dr. Bandyopadhyay finds that absolute measures of inequality represent a more appropriate tool for time dependent studies as relative measures carry the effect of shocks for a longer period.

Dr. Sanchary Roy continued presenting a paper on stigma, discrimination and self-image in Kolkata brothels. Using a randomized control trial, Dr. Roy and co-authors study a training program designed to raise self-esteem of a highly stigmatized group, sex workers in Kolkata (India). The paper shows a significant impact of the training on self-reported measures of happiness and self-esteem in the treatment group and also a higher effort towards improving future outcomes as measured by the participants’ savings choices and health-seeking behaviour. The study calls for the need to consider psychological factors in the design of anti-poverty programs. Dr. Pierre-Louis Vézina (King’s College) presented a study where the case of Gulags is used as a natural experiment to examine the long-run effects of initial levels of human capital on economic development. Following the economic transformation and the education levels of the population, the study finds that cities next to Gulags with a higher share of members of the elites (“enemies of the people”), display a higher level of education today, which shows that education has a persistent effect on prosperity. Finally, Prof. Elias Papaioannou (London Business School) discussed his innovative research on intergenerational mobility in Africa. Using a very large dataset which covers over 20 millions of individuals in 23 African countries, Papaioannou argued that African education is rising on average but there are substantial differences in who is escaping illiteracy. These differences are partly explained by geographical and historical factors affecting the transmission of education.

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